I 

118TH CONGRESS 

2D SESSION H. R. 9110 

To amend title 11, United States Code, to make the filing of a petition 

for relief under chapter 11 that is objectively futile or in subjective 

bad faith a cause for dismissal of the case, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 23, 2024 

Mrs. SYKES (for herself, Mr. NADLER, and Mr. GOODEN of Texas) introduced 

the following bill; which was referred to the Committee on the Judiciary 

A BILL 

To amend title 11, United States Code, to make the filing 

of a petition for relief under chapter 11 that is objectively futile or in subjective bad faith a cause for dismissal of the case, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Ending Corporate 

5 Bankruptcy Abuse Act of 2024’’. 

6 SEC. 2. CONVERSION OR DISMISSAL UNDER CHAPTER 11. 

7 Section 1112(b) of title 11, United States Code, is 

8 amended— 


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1 (1) in paragraph (2)(A), by striking ‘‘within a 

2 reasonable period of time’’ and inserting ‘‘not later 

3 than 24 months after the date of the filing of the 

4 petition’’; 

5 (2) in paragraph (4)— 

6 (A) subparagraph (O), by striking ‘‘and’’ 

7 at the end; 

8 (B) in subparagraph (P), by striking the 

9 period at the end and inserting ‘‘; and’’; and 

10 (C) by adding at the end the following: 

11 ‘‘(Q) with respect to the dismissal of a case 

12 under this chapter, the filing of a petition for relief 

13 or the continuation of a case under this title that 

14 is— 

15 ‘‘(i) objectively futile; or 

16 ‘‘(ii) in subjective bad faith.’’; and 

17 (3) by adding at the end the following: 

18 ‘‘(g)(1) For the purpose of subsection (b)(4)(Q), the 

19 court shall presume that a petition has been filed or that 

20 a case is continuing under this title in subjective bad faith 

21 if the court determines that the debtor manufactured the 

22 venue for the case. 

23 ‘‘(2) The presumption under paragraph (1) may be 

24 rebutted only based on clear and convincing evidence. 


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1 ‘‘(h)(1) For the purpose of subsection (b)(4)(Q), the 

2 court shall conclusively presume that a petition has been 

3 filed or that a case under this title that is continuing in 

4 subjective bad faith if the court determines that— 

5 ‘‘(A) a purpose or effect of the filing or con6 tinuation is to— 

7 ‘‘(i) gain a tactical litigation advantage; 

8 ‘‘(ii) impose undue delay upon creditors; or 

9 ‘‘(iii) cap the total amount of the liability 

10 of the debtor to 2 or more creditors holding 

11 protected claims (as defined in section 

12 362(p)(1)) that the debtor or any affiliate has 

13 property of value sufficient to pay in full as 

14 those claims would come due; 

15 ‘‘(B) during the 4-year period preceding the 

16 date of the filing of the petition, the debtor was the 

17 subject of, or was formed or organized in connection 

18 with, a divisional merger or similar transaction 

19 changing the corporate structure of and affecting 

20 the financial condition of the debtor or an affiliate; 

21 ‘‘(C) during the 4-year period preceding the 

22 date of the filing of the petition, the debtor engaged 

23 in a transfer of substantial assets to or for benefit 

24 of or incurred substantial obligations from or for the 

25 benefit of any insider or affiliate that, notwithVerDate Sep 11 2014 06:49 Aug 20, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H9110.IH H9110

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1 standing subsections (e) through (g) and (j) of sec2 tion 546, is avoidable under section 544(b) or sub3 section (a)(1) or (e) of section 548; or 

4 ‘‘(D) the debtor does not have a valid re5 organizational purpose. 

6 ‘‘(2) In making a determination under paragraph 

7 (1)(D), the court shall consider and give weight to whether 

8 any appointed creditors’ committee supports the dismissal 

9 of the case. 

10 ‘‘(i) In a determination under subsection (g) or (h), 

11 the debtor shall have the burden of proof.’’. 

12 SEC. 3. LIMITATIONS ON CERTAIN STAYS AND INJUNC13 TIONS. 

14 Section 105 of title 11, United States Code, is 

15 amended by adding at the end the following: 

16 ‘‘(e) Notwithstanding subsection (a) of this section, 

17 any provision of title 28, the Federal Rules of Bankruptcy 

18 Procedure, or any applicable nonbankruptcy law, the court 

19 may not issue any order, process, or judgment that has 

20 the purpose or effect of overriding or nullifying section 

21 362(b)(27) of this title.’’. 

22 SEC. 4. AUTOMATIC STAY. 

23 Section 362 of title 11, United States Code, is 

24 amended— 

25 (1) in subsection (b)— 


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1 (A) by redesignating paragraphs (27), 

2 (28), and (29) as paragraphs (28), (29), and 

3 (30), respectively; and 

4 (B) by inserting after paragraph (26) the 

5 following: 

6 ‘‘(27) under subsection (a) of this section, of 

7 the commencement or continuation, including the 

8 issuance or employment of process, of a judicial, ad9 ministrative, or other action or proceeding against 

10 an entity that is not a debtor in a case under this 

11 title, or any act to obtain or recover property of such 

12 entity, on account of or with respect to a protected 

13 claim against such entity, the debtor, or the estate 

14 (including a protected claim that is property of the 

15 debtor or the estate against such entity), if, during 

16 the 4-year period preceding the date of the filing of 

17 the petition, the debtor was the subject of, or was 

18 formed or organized in connection with, a divisional 

19 merger, spinoff, corporate restructuring, or other 

20 transaction changing the corporate structure of, and 

21 affecting the financial condition of, the debtor or an 

22 affiliate;’’; and 

23 (2) by adding at the end the following: 

24 ‘‘(p) For the purposes of paragraph (27): 

25 ‘‘(1) The term ‘protected claim’ means— 


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1 ‘‘(A) a claim that— 

2 ‘‘(i) is against a nondebtor entity or 

3 against property of a nondebtor entity that 

4 is alleged to be directly or indirectly liable 

5 for a claim described in subparagraph (B) 

6 against the debtor; and 

7 ‘‘(ii) arises by reason of— 

8 ‘‘(I) the nondebtor entity’s own9 ership of a financial interest in the 

10 debtor, a past or present affiliate of 

11 the debtor, or a predecessor in inter12 est of the debtor; 

13 ‘‘(II) the nondebtor entity’s in14 volvement in the management of the 

15 debtor or a predecessor in interest of 

16 the debtor or the nondebtor entity’s 

17 service as an officer, director, or em18 ployee of the debtor or a related 

19 party; 

20 ‘‘(III) the nondebtor entity’s pro21 vision of insurance to the debtor or a 

22 related party; or 

23 ‘‘(IV) the nondebtor entity’s in24 volvement in a transaction changing 

25 the corporate structure, or in a loan 


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1 or other financial transaction affect2 ing the financial condition, of the 

3 debtor or a related party, including— 

4 ‘‘(aa) involvement in pro5 viding financing (debt or equity) 

6 or advice to an entity involved in 

7 such a transaction; or 

8 ‘‘(bb) acquiring or selling a 

9 financial interest in an entity as 

10 part of such a transaction; or 

11 ‘‘(B) a claim— 

12 ‘‘(i) against the debtor or a nondebtor 

13 entity or property of the debtor or a non14 debtor entity; 

15 ‘‘(ii) relating to injury, contamination, 

16 damage, or loss, including any claim for 

17 reimbursement, indemnity, contribution, or 

18 subrogation; 

19 ‘‘(iii) affecting, directly or indirectly, 

20 not less than 100 individuals on or after 

21 the date of the filing of the petition; 

22 ‘‘(iv) allegedly caused, directly or indi23 rectly, by the presence of, or exposure to, 

24 a product, material, or substance designed, 

25 marketed, manufactured, sold, modified, 


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1 extracted, serviced, or in any way used by 

2 the debtor or the nondebtor entity; and 

3 ‘‘(v) arising, directly or indirectly, 

4 from acts or omissions, of the debtor, a 

5 predecessor in interest of the debtor, or a 

6 past or present affiliate of the debtor. 

7 ‘‘(2) The term ‘related party’ has the meaning 

8 given the term in section 524(g)(4)(A)(iii).’’. 

9 SEC. 5. TECHNICAL AMENDMENTS. 

10 (a) SETOFF.—Section 553 of title 11, United States 

11 Code, is amended— 

12 (1) in subsection (a)— 

13 (A) in paragraph (2)(B)(ii), by striking 

14 ‘‘362(b)(27)’’ and inserting ‘‘362(b)(28)’’; and 

15 (B) in paragraph (3)(C), ‘‘362(b)(27)’’ 

16 and inserting ‘‘362(b)(28)’’; and 

17 (2) in subsection (b)(1), ‘‘362(b)(27)’’ and in18 serting ‘‘362(b)(28)’’. 

19 (b) RELIEF THAT MAY BE GRANTED UPON FILING

20 PETITION FOR RECOGNITION.—Section 1519(f) of title 

21 11, United States Code, is amended by striking ‘‘(27)’’ 

22 and inserting ‘‘(28)’’. 

23 (c) RELIEF THAT MAY BE GRANTED UPON REC24 OGNITION.—Section 1521(f) of title 11, United States 

25 Code, is amended by striking ‘‘(27)’’ and inserting ‘‘(28)’’. 


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1 SEC. 6. APPLICATION AND RULE OF CONSTRUCTION. 

2 This Act and the amendments made by this Act 

3 shall— 

4 (1) apply with respect to any case under title 

5 11, United States Code, filed or pending on or after 

6 the date of enactment of this Act; and 

7 (2) not be construed to affect the validity of 

8 any final judgment or order confirming a plan under 

9 chapter 11 of title 11, United States Code, that was 

10 entered before the date of enactment of this Act. 

Æ 


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